The Bombay High Court has dismissed a commercial execution application filed by L&T Finance Ltd., holding that the arbitral award dated August 7, 2019 is non-est in law, void ab initio and incapable of execution, as the sole arbitrator had been unilaterally appointed by the lender, rendering him de jure ineligible under Section 12(5) of the Arbitration and Conciliation Act, 1996.
The dispute arose out of loan agreements executed between the parties, pursuant to which arbitration was invoked by L&T Finance. A sole arbitrator was appointed by the lender, before whom the borrower’s raised objections to unilateral appointment by filing applications under Sections 12, 13 and 16 of the Act, all of which were rejected. The sole arbitrator thereafter passed an award directing the borrowers to pay approximately ₹1.02 crore, along with interest, costs and fees. The borrowers did not challenge the award under Section 34, following which L&T Finance initiated execution proceedings.
During execution, the borrowers once again objected to the unilateral appointment of the arbitrator, contending that the award was a nullity. The Court appointed Mr. Rubin Vakil as amicus curiae to assist on the legal issue.
While deciding the matter, Justice Rajesh S. Patil examined the recent judgment of the Supreme Court in Bhadra International (India) Pvt. Ltd. v. Airport Authority of India (decided on January 5, 2026), which authoritatively held that unilateral appointment of a sole arbitrator is void, that such an arbitrator lacks jurisdiction, and that a challenge to ineligibility can be raised even at the execution stage. The Court noted that the Supreme Court had categorically overruled all contrary High Court decisions and reaffirmed the principles laid down in TRF Ltd., Perkins Eastman and Bharat Broadband Network Ltd.
Applying this law, the Court held that the award passed in favour of L&T Finance was without jurisdiction, carried no legal enforceability, and could not be treated as a decree. The Court rejected reliance on earlier High Court decisions permitting execution, holding that they stood impliedly overruled in view of Bhadra International.
Accordingly, the High Court set aside the arbitral award, dismissed the execution application and the connected interim application, while granting liberty to the parties to initiate fresh arbitration proceedings in accordance with law, with exclusion of time spent in the earlier arbitration for limitation purposes. The Court also recorded its appreciation for the assistance rendered by the amicus curiae.
Appearances:
For the Applicant – Advocate Disha Karambar
For the Respondents – Advocates Abhishek Sawant, with Vaishali Sanghavi, Pratik Shetty, and Ameet Mehta.
Amicus Curiae – Advocate Rubin Vakil.
